Question

1omework 12 ework 12 Saved The two independent cases are listed below: Case A Year 2 Year 1 12,000 12,40022,000 23,000 Case B Year 1 Year 2 Sales Revenue $ $ 12,900 14,520 6,900 Cost of Goods Sold 9,500 2,900 рок Gross Profit 5,100 9,100 8,480 Depreciation Expense Salaries and Wages Expense 1,100 1,100 2,000 2,000 nt 1,500 1,000 6,000 6,000 ences 2,500 Net Income 800 1,100 480 Accounts Receivable 350 500 850 780 650 900 980 Inventory Accounts Payable Salaries and Wages Payable 600 800 900 750 900 1,050 1,300 260 350 fk

Answer 1

A Cash flow statement provides the following information:
1) Information about company's cash receipt and cash payment during an accounting period.
2) Information about company's operating, investing and financing activities.
3) Information access the company's liquidity, solvency and financing flexibility.
Under the indirect method, net income is converted operating cash flow by making adjustments for the transaction that effect net income but are non cash transactions. The adjustment includes eliminating non cash expenses, non operating items and the changes in the balance sheet account on account of accrual accounting events.

Cash flow from operating activities (CFO), consists of the inflows and outflows of cash resulting from revenue and expense transactions that affect a firm's net income.

Case B Amount $2,500 $1,100 Statement of Cash Flows (Partial) Case A Particulars Amount Cash Flow from Operating Activities Net Income Adjustment to Reconcile Net Income to Net Cash provided by operating actvities Depreciation expense $1,100 Changes in Assets and Liabilites : Change in accounts receivable $150 Change in inventory ($200) Change in accounts payable $150 Change in salaries and wages payable ($250) Net Cash provided Operating Activities $3,450 $2,000 ($ 200) $120 ($80) ($90) $2,850 Working Case A Particulars Closing Opening Balance Balance (A) (B) Accounts Receivable $350 $500 inventory $800 $600 Accounts Payable $900 $750 Salaries and Wages Payable $1,050 $1,300 Increase in Assets is Cash Outflow and Decrease in Assets in Cash Inflow Increase in Liability is Cash Inflow and Decrease in Liability in Cash Outflow Increase /(Decrease) (A) - (B) ($150) $200 $150 ($250) Closing Balance (C) $850 $780 $900 $260 Case B Opening Balance (D) $650 $900 $980 $350 Increase /(Decrease) (C)-(D) $200 ($120) ($80) ($90)